A guide for business
Statement by a supplier (reason for not quoting an ABN to an enterprise) is available as a downloadable PDF:
The following information provides guidance on:
- pay as you go (PAYG) withholding from payments for supplies, and
- the requirements for quoting an Australian business number (ABN).
When you pay suppliers who provide goods or services to your business, those suppliers generally need to quote an ABN. They can quote their ABN on an invoice or some other document that relates to the goods and/or services they provide. If any supplier does not provide its ABN, you may need to withhold an amount from the payment for that supply. This is referred to as ‘No ABN withholding’.
Withholding from payments
Generally, you must withhold 46.5% of the total payment for a supply unless:
- you have an invoice or some other document relating to the supply on which the supplier’s ABN is quoted
- the ABN of the supplier’s agent is quoted (if the supply is made through the agent), or
- one of the exceptions to withholding applies or the supplier is not entitled to an ABN.
You may also be required to withhold 46.5% from the payment if you have reasonable grounds to believe that the ABN quoted is invalid (for example, it belongs to another entity).
Quoting an ABN
A supplier must quote their ABN by the time the payment is made to prevent 46.5% of a payment being withheld. A supplier may quote their ABN on an invoice or other document relating to the supply.
Documents on which an ABN may be quoted include:
- invoices
- quotes
- renewal notices (such as for insurance or subscriptions)
- order forms
- receipts
- contracts or lease documents
- letterheads, emails or internet records (web pages)
- records of over-the-phone quotation of an ABN and/or
- catalogues (and other promotional documents) the supplier produces.
You must keep this information with other records relating to the supply.
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You do not have to check whether the ABN is valid. However, if you suspect that the ABN quoted does not belong to the supplier or the supplier’s agent you can check it by either visiting abr.business.gov.au or phoning the Tax Office on 13 72 26, 24 hours a day, seven days a week.
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When withholding is not required
You do not have to withhold an amount from a payment if:
- the payer is not making the payment in the course of carrying on an enterprise in Australia
- the payment is $75 or less, excluding any goods and services tax (GST)
- the supply that the payment relates to is wholly input-taxed, or
- the supplier is an individual and has given you a written statement which says:
- the supply relates to a private recreational pursuit or hobby, or
- the supply is wholly of a private or domestic nature for that supplier.
However, you should withhold if you have reasonable grounds to believe that this statement is false or misleading.
- The supplier is an individual aged under 18 years and the payment does not exceed $120 a week.
You also should not withhold an amount from a payment if you are satisfied that:
- the supply is made by an individual or partnership without a reasonable expectation of profit or gain
- the supplier is not entitled to an ABN as they are not carrying on a business or enterprise in Australia, or
- the whole of the payment is exempt income for the supplier.
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If a supplier has applied for an ABN, they may ask you to hold back payment until the ABN has been obtained and quoted. This is a matter for you and the supplier to work out. However, unless one of the above exceptions applies, you must withhold 46.5% of the payment if it is made before an ABN is quoted. If you do not withhold from the payment, you may have to pay a penalty equal to the amount you should have withheld.
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Informing the payer if no withholding applies
As the payer, you may request a written statement from the supplier to justify not withholding if the supply:
- relates to a private recreational pursuit or hobby. For example, a hobby artist receives a prize of $100 in a shopping centre art show, or
- is wholly of a private or domestic nature for the supplier. For example, a home owner sells some personal furniture to a second hand store.
As a minimum, the statement should contain:
- the supplier's name and address
- why it was not necessary to withhold, and
- the supplier's signature.
The Tax Office has developed a form, Statement by a supplier, which is can be used for this purpose.
If you do not withhold because an exception applies, you should keep sufficient records to:
- identify the supply and the supplier, and
- justify the reason for not withholding.
You may choose to obtain a signed statement from the supplier containing the required information or use our form. If we conduct a review and find that the statement was incorrect, you won’t be penalised if we believe it was reasonable for you to rely on the supplier’s signed statement.
If you are required to withhold
If you are required to withhold an amount, you must:
- be registered for PAYG withholding. This can be done by phoning 13 28 66 between 8.00am and 6.00pm Monday to Friday. You may already be registered if you are withholding from other payments, such as wages to employees
- withhold 46.5% of the payment unless an exception applies
- report and pay the withheld amounts to the Tax Office using your activity statement
- complete a PAYG payment summary – withholding where ABN not quoted (NAT 3283), providing a copy to the supplier at the time of payment or as soon as possible afterwards. Suppliers can use the payment summary to claim a credit in their income tax return for the amount withheld
- keep a copy of the payment summary with your records
- complete a PAYG withholding where ABN not quoted – annual report (NAT 3448).
If you do not withhold when required
You may be subject to penalties if you do not withhold an amount when required. The penalty will be equal to the amount that should have been withheld. It is an offence not to withhold and the payer may be prosecuted in appropriate cases.
More information
If you need more information about ABNs, you can:
- visit www.abr.gov.au
- phone the Tax Office on 13 28 66 between 8.00am and 6.00pm Monday to Friday, or
- speak to your tax adviser.
If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.
If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.
Last Modified: Wednesday, 23 April 2008
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